AI Drafter 
TaxTMI 
TaxTMI 
Permitted sectors, entry routes and sectoral caps for total foreign investment
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....l not require Government approval or compliance of sectoral conditions as the case may be, if such investment does not result in transfer of ownership and control of the resident Indian company from resident Indian citizens or transfer of ownership or control to persons resident outside India. Other investments by a person resident outside India will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in these regulations. B. Sectoral Caps SECTOR-SPECIFIC POLICY FOR TOTAL FOREIGN INVESTMENT (1) Sectoral cap for the following sectors/ activities is the limit indicated against each sector. The total foreign investment shall not exceed the sectoral/ statutory cap. (2) Foreign investment in the following sectors/ activities is, subject to applicable laws/ regulations, security and other conditionalities (3) In sectors/ activities not listed below or not prohibited under regulation 15 of these Regulations, foreign investment is permitted up to 100 percent on the automatic route, subject to applicable laws/ regulations, security and other conditionalities. Provided foreign investment in f....
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....) Development and production of seeds and planting material; (c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture; and (d) Services related to agro and allied sectors. Note: Other than the above, foreign investment is not allowed in any other agricultural sector/ activity. 100% Automatic 1.2 Other Conditions The term 'under controlled conditions' covers the following: 'Cultivation under controlled conditions' for the categories of Floriculture, Horticulture, Cultivation of vegetables and Mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro-climatic conditions are regulated anthropogenically. 2. Plantation 2.1 (a) Tea sector including tea plantations (b) Coffee plantations (c) Rubber plantations (d) Cardamom plantations....
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.....1.2006, issued by the Department of Atomic Energy. Clarification: (i) For titanium bearing ores such as Ilmenite, Leucoxene and Rutile, manufacture of titanium dioxide pigment and titanium sponge constitutes value addition. Ilmenite can be processed to produce Synthetic Rutile or Titanium Slag as an intermediate value added product. (ii) The objective is to ensure that the raw material available in the country is utilized for setting up downstream industries and the technology available internationally is also made available for setting up such industries within the country. Thus, if with the technology transfer, the objective of this regulation can be achieved, the conditions prescribed at (a)(i) above shall be deemed to be fulfilled. 4. Petroleum & Natural Gas 4.1 Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/ pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regu....
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.... 7. Broadcasting 7.1 Broadcasting Carriage Services 7.1.1 (a) Teleports (setting up of up-linking HUBs/ Teleports); (b) Direct to Home (DTH); (c) Cable Networks (Multi System Operators (MSOs) operating at National or State or District level and undertaking up-gradation of networks towards digitalization and addressability); (d) Mobile TV; (e) Head-end-in-the Sky Broadcasting Service (HITS) 100% Automatic 7.1.2 Cable Networks (Other MSOs not undertaking up-gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs)). 100% Automatic 7.1.3 Note: Infusion of fresh foreign investment for sectors specified in 7.1.1 and 7.1.2 above, beyond 49 percent in a company not seeking license/ permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval 7.2 Broadcasting Content Services 7.2.1 Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditio....
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.... (2) In the case of an Indian company, (aa) The Indian company (bb) A group of Indian companies under the same management and ownership control. 3. For this purpose, "Indian company" shall be a company which must have a resident Indian or a relative as defined under Section 2 (77) of Companies Act, 2013/ HUF, either singly or in combination holding at least 51percent of the shares. 4. Provided that, in case of a combination of all or any of the entities mentioned in Sub-Clauses (d)(i) above, each of the parties shall have entered into a legally binding agreement to act as a single unit in managing the matters of the applicant company. 8. Print Media 8.1 Publishing of newspaper and periodicals dealing with news and current affairs 26% Government 8.2 Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Government 8.2.1 Other conditions '(a) Magazine'....
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....ersons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights; (d) "Air Transport Undertaking" means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; (e) "Aircraft component" means any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment; (f) "Helicopter" means a heavier than air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis; (g) "Scheduled air transport service" means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public; (h) "Non-Scheduled air transport service" means any service which is not a scheduled air transport service and will include Cargo airlines; (i) "Cargo airlines" would mea....
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....plicable rules and regulations. (iii) A Scheduled Operator's Permit can be granted only to a company: a. (1) that is registered and has its principal place of business within India; b. (2) the Chairman and at least two-thirds of the Directors of which are citizens of India; and c. (3) the substantial ownership and effective control of which is vested in Indian citizens. (iv) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport services, as a result of such foreign investment shall be cleared from security view point before deployment; and (v) All technical equipment that might be imported into India as a result of such foreign investment shall require clearance from the relevant authority in the Ministry of Civil Aviation. ^4[(d) In addition to the above conditions, foreign investment in M/s Air India Limited shall be subject to the following conditions: (i) Foreign investment in M/s Air India Ltd., including that of foreign airline(s), shall not exceed 49% either directly or indirectly. (ii) Substantial ownership and effective control of M/s Air India Ltd. ....
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....nage and sewerage, have been made available. (f) The Indian investee company shall be responsible for obtaining all necessary approvals, including those of the building/ layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/ bye-Laws/ regulations of the State Government/ Municipal/ Local Body concerned. (g) The State Government/ Municipal/ Local Body concerned, which approves the building/ development plans, will monitor compliance of the above conditions by the developer. Note: (1) Foreign investment is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm houses and trading in transferable development rights (TDRs). (2) Condition of lock-in period will not apply to Hotels and Tourist Resorts, Hospitals, Special Economic Zones (SEZs), Educational Institutions, Old Age Homes and investment by NRIs/ OCIs. (3) Completion of the project will be determined as per the local bye-laws/ rules and other regulations of State Governments. ....
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.... or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or (v) any transaction, by acquiring capital instruments in a company or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of, any immovable property. ^6[(7) Real estate broking services shall be excluded from the definition of "real estate business" and 100% foreign investment is allowed in real estate broking services under automatic route] 11. Industrial Parks 100% Automatic 11.1 For the purpose of this sector: (a) "Indust....
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.... technical activities. 11.2 Foreign investment in Industrial Parks would not be subject to the conditionalities applicable for construction development projects etc. spelt out in para 10 above, provided the Industrial Parks meet with the under-mentioned conditions: (a) it would comprise of a minimum of 10 units and no single unit shall occupy more than 50 percent of the allocable area; (b) the minimum percentage of the area to be allocated for industrial activity shall not be less than 66 percent of the total allocable area. 12. Satellites - Establishment and operation Satellites Establishment and operation, subject to the sectoral guidelines of Department of Space/ ISRO 100% Government 13. Private Security Agencies 49% Government 14. Telecom services (including Telecom Infrastructure Providers Category-l) 14.1 All telecom services including Telecom Infrastructure Providers Category-I, viz. Basic, Cellular, United Access Services, Unified license (Access services), Unified License, National/ International Long Distance, Commercial V-Sat, Public Mobile Radi....
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....i) Entities holding trade licenses i.e. a license/ registration certificate/ membership certificate/ registration under Shops and Establishment Act, issued by a Government Authority/ Government Body/ Local Self-Government Authority, reflecting that the entity/ person holding the license/ registration certificate /membership certificate, as the case may be, is itself/ himself/ herself engaged in a business involving commercial activity; or (iii) Entities holding permits/ license etc. for undertaking retail trade (like tehbazari and similar license for hawkers) from Government Authorities/ Local Self Government Bodies; or (iv) Institutions having certificate of incorporation or registration as a society or registration as public trust for their self-consumption. Note: An Entity, to whom WT is made, may fulfil any one of the 4 conditions at (b)(i) to (iv) above. (c) Full records indicating all the details of such sales like name of entity, kind of entity, registration/ license/ permit etc. number, amount of sale etc. should be maintained on a day to day basis. (d) WT of goods shall be permitted among companies ....
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....ntity will be permitted to enter into transactions with sellers registered on its platform on B2B basis. (g) E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. ^18[(h) E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Explanation : Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies which will render the business into inventory based model.] ^19[(i) An entity having equity participation by e-commerce marketplace entity or its group companies or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.] (j) Goods/ services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfact....
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....to be sold should be of a 'Single Brand' only. (b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. (c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing. ^8[(d) A person resident outside India, whether owner of the brand or otherwise, shall be permitted to undertake 'single brand' product retail trading in the country for the specific brand, either directly by the brand owner or through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading and the brand owner.] (e) In respect of proposals involving foreign investment beyond 51 percent, sourcing of 30 percent of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. The procurement requirement is to be met i....
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....of 'state-of-art' and 'cutting-edge' technology where local sourcing is not possible and give recommendations for such relaxation.] 15.4 Multi Brand Retail Trading (MBRT) 51% Government 15.4.1 Other Conditions (a) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, can be unbranded. (b) Minimum amount to be brought in as foreign investment would be USD 100 million. (c) At least 50 percent of the total foreign investment brought in the first tranche of USD 100 million, shall be invested in 'back-end infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of back-end infrastructure. Subsequent investment in the back-end in....
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....policy. The States/ Union Territories which have conveyed their agreement are mentioned at 15.4.2. Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed to the Government of India through the Department of Industrial Policy and Promotion and additions would be made to the said list. The establishment of the retail sales outlets will be in compliance of applicable State/ Union Territory laws/ regulations, such as the Shops and Establishments Act etc. (i) Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with foreign investment engaged in multi-brand retail trading. (j) Applications would be processed in the Department of Industrial Policy and Promotion, to determine whether the proposed investment satisfies the notified guidelines, before being considered for Government approval. 15.4.2 States/ Union Territories are Andhra Pradesh, Assam, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Maharashtra, Manipur, Rajasthan, Uttarakhand, Daman & Diu and Dadra and Nagar Haveli (Union Territories) 15.5 Duty Free Shops 100% Automatic 15.5.1 Other Con....
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....y, if any, along with induction of foreign investment into the investee company. (iv) The administrative Ministry (s) i.e. Ministry of Health and Family Welfare, Department of Pharmaceuticals or any other regulatory Agency/Development as notified by Central Government from time to time, will monitor the compliance of conditionalities. Note : (1) Foreign investment up to 100% under the automatic route is permitted for manufacturing of medical devices. The abovementioned conditions will, therefore, not be applicable to greenfield as well as brownfield projects of this industry. (2) Medical device means :- (a) Any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including the software, intended by its manufacturer to be used specially for human beings or animals for one or more of the specific purposes of:- (aa) Diagnosis, prevention, monitoring, treatment or alleviation of any disease or disorder; (ab) diagnosis, monitoring, treatment, alleviation of, or assistance for, any injury or ^13[disability]; (ac) investigation, r....
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....edicated freight lines, (iv) Rolling stock including train sets, and locomotives/ coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signalling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/ sidings including electrified railway lines and connectivity to main railway line and (x) Mass Rapid Transport Systems. 100% Automatic 17.2 Other Conditions (a) Foreign investment in this sector open to private-sector participation is subject to sectoral guidelines of Ministry of Railways. (b) Proposals involving foreign investment beyond 49 percent sensitive areas from security point of view, will be brought by the Ministry of Railways before the Cabinet Committee on Security (CCS) for consideration on a case to case basis. F FINANCIAL SERVICES Investment in financial services, other than those indicated below, would require prior Government approval. F.1 Asset Reconstruction Companies 100% Automatic F.1.1 Other Conditions (a) Investment limit of a sponsor in the....
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....sults in any person owning or controlling 5 percent or more of the paid up capital of the private bank will apply to foreign investment as well. (g) Setting up of a subsidiary by foreign banks (i) Foreign banks will be permitted to either have branches or subsidiaries but not both. (ii) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve Bank's licensing criteria will be allowed to hold 100 percent paid-up capital to enable them to set up a wholly-owned subsidiary in India. (iii) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 percent in a private bank. (iv) A foreign bank will be permitted to establish a wholly-owned subsidiary either through conversion of existing branches into a subsidiary or through a fresh banking license. A foreign bank will be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 percent of the paid-up capital of the private sector bank is held by residents at all times consisten....
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.... 49% Automatic F.5.1 Investment shall be subject to guidelines prescribed by the Central/ State Government F.6 Power Exchanges Power Exchanges under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 49% Automatic F.6.1 Other conditions ^16[*******] (b) A person resident outside India including persons acting in concert should not hold more than 5 percent. (c) The investment would be in compliance with Securities and Exchange Board of India Regulations, other applicable laws/ regulations, security and other conditionalities F.7 Credit Information Companies 100% Automatic F.7.1 Other conditions (a) Foreign investment in Credit Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005 and regulatory clearance from the Reserve Bank. (b) FPI investment would be permitted subject to the following conditions: (....
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....same meaning as provided in Notification No. G.S.R 115 (E), dated 19th February, 2015 issued by Department of Financial Services and regulations issued by Insurance Regulatory and Development Authority of India from time to time. F.9 Pension Sector 49% Automatic F.9.1 Other conditions (a) Foreign investment in this sector shall be in accordance with the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013. (b) Foreign investment in Pension Funds will be subject to the condition that entities investing in capital instruments issued by an Indian Pension Fund as per Section 24 of the PFRDA Act, 2013 shall obtain necessary registration from the PFRDA and comply with other requirements as per the PFRDA Act, 2013 and Rules and Regulations framed under it for so participating in Pension Fund Management activities in India. (c) An Indian pension fund shall ensure that its ownership and control remains at all times with resident Indian entities as determined by the Government of India/ PFRDA as per the rules/ regulation issued by them. F.10 Other Financial Serv....
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....ework for CICs." 2. Inserted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 3. Substituted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as 4. Inserted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 5. Omitted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "(3) The policy mentioned at 9.5(c) above is not applicable to M/s Air India Limited." 6. Inserted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 7. Substituted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "Automatic up to 49%; Government route beyond 49%" 8. Substituted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "A person resident outside India, whether owner of the brand or otherwise, shall be permitted to undertake 'single brand' product retail trading in the country for the specific brand, directly or through a le....
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....norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, condition mentioned at (e) above will be applicable." 13. Substituted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "handicap" 14. Substituted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "a device which is reagent, reagent product, calibrator, control material, kit, instrument, apparatus, equipment or system whether used alone or in combination thereof intended to be used for examination and providing information for medical or diagnostic purposes by means of in vitro examination of specimens derived from the human body or animals." 15. Omitted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018, w.e.f. 26-03-2018 before it was read as, "(3) The definition of medical device at Note (2) above wo....